Dec 10, 2007

Trapped in the gift card webBy Madlen ReadDetNews.com

People are increasingly turning to gift cards as spending hours in a crowded mall looking for that last Xbox, iPod or Elmo grows less and less appealing. But shoppers should do a bit of research first.

The gift cards that require the most diligence are from banks and credit-card companies. They can be used nearly anywhere the issuer’s credit card is accepted.

More importantly, they expire, and the issuers tend to tack on fees.

American Express gift cards charge a monthly service fee of $2 after a year and $5.95 to replace a lost or stolen card. The card has a “valid through” date — if it expires and you still have funds remaining, you can ask for a check for the amount, but American Express will deduct $10.

Discover doesn’t charge a shipping fee, but its gift cards deduct a $2.50 dormancy fee after a year of inactivity, and expire after two years. You can request a replacement card for up to 90 days after expiration, but it costs $5.

For Visa and MasterCard gift cards, the individual banks that issue them can provide fee information. Be sure to ask specifically about upfront fees, dormancy fees, fees to check your balance, and fees to get your balance back if the card expires.

Gift cards issued by retailers are more restrictive in the obvious sense — the recipient can only spend them at the store — but they usually don’t have fees or expiration dates. So if you know where your friend likes to shop, a store gift card is probably a better choice than a bank gift card.

If your friend is a big online shopper, ask if the card can be used for Web purchases. Home Depot Inc. gift cards, for example, can only be used in stores.

The National Retail Federation said 92 percent of the leading retailers have no gift card fees. Of the 22 major retailers surveyed this year by financial site www.Bankrate.com, none charged fees for their gift cards, and only Macy’s and Bloomingdale’s had expiration dates.

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